The Securities Commission granted ATB Investment Management Inc. (the Filer) an exemption from certain requirements of National Instrument 81-102 Investment Funds (NI 81-102), specifically paragraphs 15.3(4)(c) and (f). This exemption allows the Filer to reference FundGrade A+ Awards and FundGrade Ratings in sales communications for mutual funds it manages, despite these references not meeting the standard matching and timing requirements for performance data disclosure.
The FundGrade A+ Awards, given by Fundata Canada Inc., recognize funds with strong risk-adjusted performance relative to peers. The awards are based on a proprietary rating system that evaluates funds using the Sharpe Ratio, Information Ratio, and Sortino Ratio over various time periods. The top-performing funds receive letter grades monthly, culminating in an annual FundGrade A+ Award for those with a GPA of 3.5 or higher.
The exemption was granted on the condition that sales communications comply with Part 15 of NI 81-102, except as specified, and include clear disclosure of the award or rating details, the number of funds in the category, the ranking entity, the period the award or rating is based on, and a statement that ratings are subject to monthly change. Additionally, the FundGrade A+ Award referenced must not be older than 365 days, and the ratings must be based on performance comparisons within categories established by the Canadian Investment Funds Standards Committee (CIFSC) or its successor.
The decision, underpinned by the securities legislation of Alberta and Ontario, reflects the regulators’ satisfaction that the exemption meets the legislative test and will not be misleading to investors. The Alberta Securities Commission is the principal regulator for this application, and the decision also represents the consent of the securities regulatory authority in Ontario.